Need a loan? Surely you have your reasons for that.
But, getting a loan is not that simple.
If you never did it before, you may be very attracted to the way a loan sounds, especially after you get the full set of advantages presented by the bank’s representatives. Still, keep in mind that they are very much like any seller, trying to sell their merchandise, which is in this case a financial product. So don’t let them choose for you and do your choices, based on what it is best for you. And this will not be easy, as you will have to do some research, compare findings and in the end choose the best type of loan for you.
Now, how can you tell if a loan is cheap? This is a very tricky question because loans can appear cheap, but in the end you pay more money than you borrowed. So what you have to look for is a small interest rate. Interest rates are the ones dictating if a loan is cheap or not.
You will see that many banks or money lenders focus on the sum of money you wish to borrow, and will discuss very little about the interest rate. They will take the amount you say you need and split it over a larger period, let’s say five years, just to make it look like you have to pay a small rate every month. But, doing a simple math exercise, just multiply your monthly rate with 60 months, which are included in the five years period, and see that you almost pay the sum tripled in the end.
So, you need to visit more banks and money lenders and ask them to make you an offer for the sum you need to borrow. They will have to give you the conditions of the loan, like what you need to be eligible, the interest rate and available period for the loan. It may not be easy, but try and gather as many offers as you can. You will see that conditions and interest rates differ from one institution to another.
It is the only way to make sure that you get the cheapest personal loan available. Because, if you sign a loaning contract with a bank, there is no turning back. Also, if you do research, you might find lenders that have special offers with small interest rates, meant to attract more customers. And usually these offers are for a limited period, as they act pretty much like any other marketing campaign.
Thus, with the gathered data, you will have to make a comparison and see on which loan you pay less. You will find that having a small period for your loan is better since you won’t pay that much in the end. Still, the monthly rates may be a bit higher, compared to the monthly rates for a more extended period. But, again, don’t let yourself be fooled by that because it is a trick banks do and make a calculation of that type of loan. Loans will smaller rates, but on extended periods, will always mean more money paid back to the bank.